Nov. 1 (Bloomberg) -- Manufacturing expanded more than
forecast, consumer confidence rose to a four-year high and fewer
Americans filed claims for unemployment benefits, pointing to
resilience in the U.S. economy heading into the fourth quarter.

The Institute for Supply Management’s factory index rose to
a five-month high of 51.7 in October from 51.5, the Tempe,
Arizona, group reported today. The Conference Board’s sentiment
index increased to 72.2, the highest since February 2008.
Applications for jobless benefits fell by 9,000 to 363,000 in
the week ended Oct. 27, the Labor Department said in Washington.

“We’re getting a sense of stabilization, we’re no longer
slipping,” said Michael Feroli, chief U.S. economist at
JPMorgan Chase & Co. in New York. “This should ease concerns
that we were feeling two or three months ago about the state of
the economy.”

Stocks rose on optimism the world’s largest economy is
weathering a global slowdown and the prospect of $607 billion in
federal spending cuts and tax increases set to kick in early
next year unless Congress acts. At the same time, a report
tomorrow on the labor market, the last before the presidential
election, may show employers are keeping a tight rein on hiring.

The Standard & Poor’s 500 Index gained 1 percent to
1,425.70 12:46 p.m. in New York. The yield on the 10-year
Treasury note rose to 1.72 percent from 1.69 percent late
yesterday.

Elsewhere, indexes from Britain to Sweden showed
manufacturing contracted in October, while factory output
expanded in China for the first time in three months,
underscoring the diverging speeds of the global recovery.

At the same time, “our outlook for Europe has weakened,”
he said. Light-vehicle volumes may be down 13 percent in the
fourth quarter, more than the 5 percent drop previously
projected, Manganello said.

Jobs and the economy are central themes in the election
campaign. President Barack Obama has said the economy is
improving after he averted a deeper recession, while Republican
challenger Mitt Romney counters that the president’s policies
have prevented a faster recovery.

Atlantic superstorm Sandy may crimp growth this quarter
after it left a trail of destruction in the Northeastern U.S.,
keeping millions of people from work, knocking out electric
power and disrupting railroads, airlines and subway systems.

Auto Sales

Sandy took a toll on auto sales. General Motors Co. and
Chrysler Group LLC reported October rates for industry sales
that trailed analysts’ estimates. GM, the largest U.S.
automaker, projected a 14.4 million industry light-vehicle sales
pace.

Other reports in the U.S. today showed private employers
expanded payrolls in October by the most in eight months and
construction spending climbed in September to the highest level
in almost three years.

The Roseland, New Jersey-based ADP Research Institute said
companies expanded payrolls by 158,000 last month following a
revised 114,000 gain in September.

Figures from the Labor Department tomorrow are likely to
show that total payrolls, including government employees,
climbed by 125,000 in October following a 114,000 increase the
month before, according to the median forecast in a Bloomberg
survey. The gain wasn’t enough to prevent the jobless rate from
rising to 7.9 percent from 7.8 percent, another survey showed.

Consumer Sentiment

Even so, two years of payroll growth, declining gasoline
prices and a nascent housing recovery are helping shore up
household balance sheets and bolstering sentiment.

The Bloomberg Consumer Comfort Index was minus 34.7 in the
period ended Oct. 28 after improving the previous week to minus
34.6, the highest since mid-April. The measure has been above
minus 40, a level associated with recessions and their
aftermath, for the past six weeks.

“We’re very pleased with what we’re seeing,” John
Foraker, chief executive officer of Berkeley, California-based
Annie’s Inc., an organic food company, said on an earnings
teleconference on Oct. 30. “Improving consumer confidence and
consumers feeling a little bit better about their pocketbook is
also helping.”

Economists’ Projections

Economists forecast an October reading of 51 for the ISM
factory index, according to the median estimate in a Bloomberg
survey of 88 economists. A reading of 50 is the dividing line
between growth and contraction.

The group’s measures of production and orders climbed,
while a gauge of export demand was little changed.

The global economy is struggling to improve. The euro-area
jobless rate climbed to a record in September as the debt crisis
eroded investor and business confidence. Unemployment in the 17-nation region rose to 11.6 percent, the highest since the data
series started in 1995, from 11.5 percent in August, the
Luxembourg-based European Union statistics office reported
yesterday.

The debt crisis has pushed at least five euro nations into
recessions, forcing companies to cut costs to help weather the
turmoil. Economic confidence in the region fell in October.

“Clearly we are experiencing significantly weaker demand
in many of our largest markets,” Thomas Linebarger, chairman
and chief executive officer at Cummins Inc., said on a
conference call yesterday. Columbus, Indiana-based Cummins is a
maker of heavy-truck engines. “Unfortunately, there is also a
high degree of uncertainty about the direction of the global
economy, and at this point in time, it is not clear when demand
will improve.”